Definition of EBIT | Earnings Before Interest and Tax

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EBIT Definition

Short Definition
This acronym is derived from Earnings Before Interest and Tax. In accounting and finance, EBIT is a way to determine the profitability of a business by excluding interest and income tax expenses from a financial report.

Extended Definition
EBIT stands for Earnings Before Interest and Tax. It is a calculation commonly used to measure the profitability of a company.  When comparing one business to another for investment purposes, EBIT levels the field and makes it easier to compare apples to apples. It can also be referred to as Operating Profit or Operating Income and represents cash available to pay the debts of a business.

Related Blog Article:
What Does EBIT Mean?
How to Calculate EBITDA

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